Most Buyers Still Worried About Financing

As 2013 ended, less than 40 percent of consumers think that it will be easier to secure a mortgage in the coming buying season despite data showing lending standards.

In a series of national consumer surveys over the past year, Prudential Real Estate has tracked consumer attitudes towards changing conditions in real estate markets, including access to financing.

In the fourth quarter of 2014, Prudential Real Estate’s Consumer Outlook Survey found that, though  consumers are more committed to buying and selling homes in 2014 than they were during the previous year, just 39% of respondents believe it will be easier to secure a mortgage loan in 2014.

However, Ellie Mae reported that by the end of the year median FICO scores for approved mortgages had fallen from 748 to 727 and the percentage of approved purchase loans rose from 34% at the end of 2012 to 54% at the end of 2013.

In its Q2 survey last year, Prudential found that consumer sentiment continued to reflect the challenges people face through strict underwriting guidelines and credit-score requirements at that time. Some 57% of respondents said securing a mortgage is more difficult than it ever was prior to the market crisis and nearly 40% said lenders are “overly cautious” when it comes to mortgage financing.  Anxiety and fear of losing a real estate opportunity are respondents’ main emotional challenges in seeking home financing.

The Q4 survey also found that  71% said they are encouraged to buy a home now rather than later. “Decreasing home values” was the No. 1 concern of respondents, followed by “saving enough for a down payment.” Consumers also acknowledged that tight housing inventory may impact their home-buying decisions this year: 67% expect to face more competition for homes on the market.

A full 65% said they are optimistic about the housing market in 2014 and a nearly 60% believe home sales will increase during the year. Half of all respondents believe that the rate of appreciation in U.S. home values will slow this year after a strong run in 2013.

“Consumers understand that the U.S. economy and residential real estate continue moving in positive directions,” said Earl Lee, CEO of HSF Affiliates LLC. “Accordingly, they’re feeling much better about their personal situations and want to take advantage of attractive home prices in many markets and interest rates that remain low by historical standards.” Prudential Real Estate is a part of the HSF Affiliates LLC real estate brokerage family, which includes Real Living Real Estate and the new Berkshire Hathaway HomeServices brand.